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Uber and Lyft settled a yearslong legal dispute with the attorney general in Massachusetts on Thursday, agreeing to pay their drivers in the state a minimum rate with some benefits.
As part of the settlement, Uber and Lyft will pay $175 million to resolve claims that the companies violated state labor laws, with most of the money to be distributed to gig workers, state officials said in a statement. But in a win for the ride-hailing companies, drivers will continue to be classified as independent contractors and not employees.
Among the benefits that the state won for its gig workers were a health insurance plan for drivers working at least 15 hours a week, expanded accident insurance and a minimum pay rate of $32.50 per hour for time spent on a ride.
The settlement followed similar pay and benefit provisions enacted in New York, California, Washington State and most recently Minnesota. Uber and Lyft have spent tens of millions of dollars on local government lobbying against efforts by workers and labor groups to increase driver pay.
“For years, these companies have underpaid their drivers and denied them basic benefits,” said Andrea Joy Campbell, the attorney general of Massachusetts. “Today’s agreement holds Uber and Lyft accountable, and provides their drivers, for the very first time in Massachusetts, guaranteed minimum pay, paid sick leave, occupational accident insurance and health care stipends.”
The lawsuit against Uber and Lyft was first filed in 2020 by Maura Healey, the previous attorney general.
In separate statements, Uber and Lyft said that the settlement was a win for their drivers, and that maintaining independent contractor status was important for flexibility.
“This agreement is an example of what independent, flexible work with dignity should look like in the 21st century,” Tony West, Uber’s chief legal officer, said in a statement.
“We’re thrilled to reach an agreement that works for everyone, and builds on similar progress we’ve made in states like New York, California, Minnesota and Washington,” said Jeremy Bird, Lyft’s executive vice president of driver experience.
As a result of the settlement, both companies will avoid a potential Massachusetts ballot initiative fight over driver classification in November.
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